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Buildings insurance explained

This buildings insurance buyers guide outlines the types of buildings insurance and issues you need to be aware of as a buyer of buildings insurance.

Buildings insurance covers the structure of your property, such as the walls, ceiling, roof and windows and it also covers permanent fixtures and fittings (baths and a fitted kitchen, for instance).

You're usually protected against damage caused by:

fire
bad weather (such as floods or storms, including falling trees)
earthquakes
theft or vandalism
subsidence
burst water pipes

Unless you pay extra, you're not usually covered for accidents you cause.

Buildings insurance and your address

You address is the main factor in whether you can get really cheap building insurance.

Insurers use your postcode to assess the risk of claims – taking account of how likely flooding, subsidence and severe weather are.

But insurers take different views of postcodes and some specialise in certain customers, so insurance quotes vary hugely and it's always worth shopping around.

How much buildings insurance you need

The amount of cover you need is the rebuilding cost of your property.

This is likely to be less than you paid for it (as much of what you paid is for the land).

Look at it this way – rebuilding identical houses is likely to cost the same. But how much they cost to buy will vary hugely, depending on where they are. It's the rebuilding cost you need to cover.

Working out the cover you need

There are a couple of ways to check the amount of cover you need:

If you had a survey done, it might tell you (remember to look for the rebuilding cost, not the actual valuation).
There is an online calculator at the Building Cost Information Service.

If your home isn't of standard construction (which usually means it's not made of brick walls with a tiled roof), you might need a valuation from a surveyor to ensure you're fully covered.

It's worth getting this right. If you over insure, you'll pay too much and if you under-insure, you may not get the full payout in any claim.

Extra buildings insurance cover

As well as the standard risks mentioned above, buildings insurance also usually covers your legal liability as the owner (if something that happens to your property damages someone else's, for instance).

Things that may be covered – so check if you want them for certain – include:

Outside the main house – garages, garden fences, swimming pools etc.
Damage to underground pipes and cables – those that supply gas, water, electricity etc and sewage pipes.
Accidental damage - although you usually have to pay extra for this.
Alternative accommodation – If any damage is so bad you need to move out. There is normally a limit of up to 15% of the total level of cover.

Flood risk

The floods of summer 2007 caused around £3billion worth of damage.

These days, you may not be able to get cheap insurance in some flood-risk areas. Insurers have agreed to cover households whenever possible. But in high-risk areas this may depend on the local authority putting in sufficient flood defences.

You can learn more about flooding and buildings insurance at the Environment Agency.

Subsidence

Buildings insurance usually covers damage through subsidence. There is often a large excess (the first amount of any claim that you have to pay) – normally at least £1,000.

The insurance industry has an agreement on how to deal with subsidence in the event of a claim shortly after you've switched insurers – so you won't lose out.

You can learn more about subsidence and buildings insurance at the ABI.

Buildings insurance explained guide brought to you by LowerMyBills from Experian

The LowerMyBills guide to buildings insurance was created to help you understand buildings insurance types, how your address affects the insurance, how much insurance you need, extra cover, flood and subsidence risk, giving you the information you need to make an informed decision when you buy buildings insurance.